Secret committee paving way for euro reform
Euractiv, 25 January 2011A little known EU committee is busy rewriting the EU's rules on bailouts and national debt without the glare of the media. On the menu of talks are tax co-ordination, national debt brakes and the ins and outs of euro bailouts.
Background
At the height of the Greek debt crisis, the EU set up in May 2010 a European Financial Stability Facility (EFSF).
The facility allows countries to borrow cash on the market against up to 440 billion of joint eurozone government guarantees to help any eurozone member state that cannot finance itself on the markets.
At a summit in October, France and Germany proposed setting up a permanent system to handle crises in the euro zone, admitting it would mean changing the EU treaties.
After the summit, the European Commission outlined details for a eurozone permanent strategy to help countries at risk of defaulting on their debts. EU leaders agreed in December to create a permanent financial safety net in 2013.
The group of technocrats and lawyers, who originate from national finance ministries, are working out all aspects of economic reform currently on the table, most of which is being driven by a German domestic agenda, said EU sources familiar with the matter.
Unofficial officials
Some EU diplomats declined to confirm the group's existence, while others admitted they knew about the group and its discrete status.
"Officially this working group does not exist," an EU diplomat intimated. "There is this ridiculous folklore that this working group does not exist," said another official.
To those in the know, the group is dubbed the Taskforce of the Euro Group Working Group, a subset of the Euro Group Working Group, which comprises the heads of national treasuries, such as France's Ramon Fernandez, and heads of central banks.
The identities of those on the taskforce are anonymous though a source estimates it comprises about ten experts who have an office at the European Commission.
Sources close to the group insist they should be left to their own devices before the market reacts badly to half-baked policies.
"The decision-making process in the EU has suffered enormously because of premature leaks of half-formed policy solutions," said a source who wished to remain anonymous.
Diplomats admitted they had grown frustrated by the increasing secrecy of the group but added that the lawyers had good reason to stay under wraps.
An EU diplomat cast doubts over the taskforce's financial know-how: "I am not sure this group of legal experts properly understands financial markets."
Not so secret policies
Understandably, policymakers are nervous as bond spreads widen across a growing number of countries. However, most of the policies being discussed have already found their way to the press.
The taskforce is reportedly currently busy working out the right size and scope of the EU bailout fund, the European Financial Stability Facility (EFSF), which has already helped Greece and Ireland. Finance ministers will then discuss the taskforce's findings at an upcoming meeting.
At the ministers last meeting they discussed ways to give more flexibility to the EFSF, including new powers to buy back bonds of debt-ridden economies.
A German agenda
In addition, sources say the taskforce is working off a German agenda driven by a recent dip in the popularity of a governing coalition partner, the German Free Democrats (FDP), and their subsequent populism.
"The single biggest influence in EU policy right now is a domestic and inward-looking situation in Germany," argues a source close to the group.
A package of economic reforms, including a permanent EU rescue fund tied to tighter tax and debt rules, is being finalised in Berlin, according to Wolfgang Schäuble, the German finance minister, speaking in an interview in Tagesspiegel newspaper at the weekend.
Interestingly, the Brussels lawyers are reportedly working on a draft policy to replicate the 2009 German debt brake across the EU, something sources say is also being touted by the Swedish government.
If member states want to increase the size or scope of the fund, then the German government will expect them to imitate the German brake, the 'Schuldenbegrenzungsregelung', which writes deficit limits into the country's constitution, according to an EU diplomat.
French President Nicolas Sarkozy came out in favour of an EU-wide adoption of constitutionally-bound debt brakes in June last year.
The group is allegedly also discussing disbursing euro loans in return for tighter fiscal rules. Germany, France and the European Commission are intent on tying business taxation into any new rules, in particular corporation taxes, said the EU diplomat.
This will not be music to the ears of Irish politicians who made clear in the run-up to the Irish bailout that their low corporation tax, which has attracted a steady influx of multinationals, is a non-negotiable mainstay of Irish industrial policy.
Nessun commento:
Posta un commento